The Best Time to Look for an Auto Loan

The Best Time to Look for an Auto Loan

Ever wish you could crack the code on when to make your biggest purchases? Whether it’s the best season for homebuying or the ultimate time of year to grab some new furniture or that giant flatscreen TV, timing is everything. So what about when it comes to financing a new vehicle purchase?

Let’s talk through some of the statistical science behind what makes a particular time the best for applying for an auto loan.

The Dealership Impact

While financing your purchase is going to be one of the most important aspects of getting the most bang for your buck, the dealerships themselves can have an impact on your buying power, and certain times of the month and year are preferable for getting the most advantageous buying scenario. One pro tip—as many larger dealerships set quotas per each month for their salespeople, a seller might be more eager to land the deal at the end of the month in order to meet set quota. Do one better and try out the ends of fiscal quarters, such as March or June—cover your bases, and get the best deal you can.

The Down-Payment Impact

One way to ensure your auto lending situation is optimal is to throw down a sizable initial payment to offset the interest rate and repayment plan. Think on what time of year you’re likeliest to have some disposable income. For some this might be tax return time in the spring, or it might be the end of your employer’s fiscal year, in the fall or the winter. Some other still might expect a holiday bonus at year’s end, which could be a great nest egg for a new rig. Time your ability to put more money down with your initial purchase.

The APR Impact

Speaking of the end of the year, a study from Lending Tree found that the average auto loan APR sits at about 7.01 percent in the month of December; however, the following month of January boasts the traditionally highest APRs for auto loans—8.57 percent. Slight ebbs and flows in the market will largely dictate the offerings in your community, but these sorts of seasonality statistics can save you a bit here or there to help a bunch in the long run.

The Discount Impact

So what about vehicles that are reaching the end of their “newness” on a car lot? What time of year are you likeliest to see discounts on the oldest models before the new ones are ushered in? This should come as no surprise, but data from Edmunds discovered that December is the likeliest month to have the best discounts on a sticker price (average 6.5 percent), while January, May and November are next in line with about 6.2 percent off.

Want to find out more about auto loan options from a local lender with the know-how and the history of financing stellar deals on a new set of wheels? Sioux Falls Fed is the place to get it started.